First Standing Committee
on Delegated Legislation
Monday 21 October 2002
[Mrs. Marion Roe in the Chair]
Railways (Interoperability) (High-Speed)
The Chairman: I remind the Committee that the scope of the instrument is narrow and that contributions should be confined to the substance of the regulations.
Mr. Christopher Chope (Christchurch): I beg to move,
That the Committee has considered the Railways (Interoperability) (High-Speed) Regulations 2002 (S.I. 2002, No. 1166).
It is a great pleasure to serve under your chairmanship, Mrs. Roe.
It is a pity that the regulations, which were brought into effect in the spring, have not been debated until now. We want to debate them because they put an enormous burden on British industry for no benefit. I should like the Committee to consider the regulatory impact assessment and the Minister's bizarre and perverse recommendation that, despite the enormous net cost to the British economy, we adopt the regulations, which have been introduced under the European directive on the interoperability of the trans-European high-speed rail system.
Mr. Don Foster (Bath): Will the hon. Gentleman remind the Committee whether it was a Conservative Government that signed up to the original 1996 directive from which the regulations flow?
Mr. Chope: If the directive was signed up to in 1996, it must have been under a Conservative Government. I am sure that the hon. Gentleman recognises that at that stage no one had any idea of its true cost, which is a cause of legitimate complaint by Conservative and other hon. Members.
The Minister for Transport (Mr. John Spellar): So they signed up to it without considering the cost.
Mr. Chope: I was not a member of the Government or the House at that time, so it is hard for me, without having access to Mrs. Currie's diaries, to know exactly what happened at the time.
What is important is that we recognise that tremendous costs are associated with the directive and now, six years later and despite the protestations at the time that it would be good for British industry and the single market, we see from the regulatory impact assessment that the net cost to the United Kingdom Government and industry will be about £76 million a year. One argument that the Minister has not yet suggested in its favour is that it was supported by a previous Conservative Government, but if that is his only reason for introducing the regulations, I remind him that we have said many times that not everything that the previous Government did turned out to be
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perfect. If Ministers of that Government were here today they would be saying not that everything is hunky dory but that the directive would cost £76.3 million without providing us with any benefit whatever. The only time the directive will provide some benefit is if and when the channel tunnel rolling stock is renewed, which will be some time in the distant future. Until then, it will be a very expensive burden for us to bear.
The Transport Sub-Committee made recommendations to the Government on the issue in March this year. The Minister will correct me if I am wrong, but I believe that there has not been any formal Government response to those recommendations. The Minister's colleague, the Transport Under-Secretary, said:
''The Transport Sub-Committee's recent report on the European transport White Paper criticised the Commission's failure to assess the costs of its proposals. We share those concerns. We shall press for a fuller explanation of the costs and benefits of the technical proposals for the rail sector.''—[Official Report, European Standing Committee A, 8 May 2002; c. 4.]
Today's debate is about the interoperability directive relating only to high-speed rail. Following on will be the interoperability directive relating to all railways. There is an estimate that that might cost the British economy not £76 million but hundreds if not thousands of millions of pounds.
This important matter warrants the debate that we have initiated, and I look forward to hearing the Minister's justification for this additional burden on British industry.
Mr. Foster: Like the hon. Member for Christchurch (Mr. Chope), I am delighted to serve under your chairmanship, Mrs. Roe.
I am genuinely surprised by the Conservatives' response to the regulations, not least because the initial directive was signed up to under a Conservative Administration. For the hon. Gentleman to have said that it was perfectly all right for a Conservative Government to sign up to it when they apparently had no idea of what its costs or implications would be for the United Kingdom strikes me as an admission of incompetence on the part of that Government. In fact, I do not think that that was the case, because it was appropriate to sign the directive. It is also appropriate to support the regulations. However, I share his concern about the time that it has taken for this debate to happen. It would have been helpful if time could have been found rather earlier.
I note with interest that the Conservative Government signed up to a large number of rail directives when in power. I quote from an article that I have recently come across, about an earlier directive:
''The response of each country to EU Directive 91/440 EEC has been quite different. The UK response was the most radical''.
The UK not only supported that directive but suggested that it should have gone further. However, you have rightly said that we must confine our comments strictly to the regulations, Mrs. Roe, so I shall simply ask the Minister three questions.
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My first question concerns the introduction of the European rail traffic management system—ERTMS—and the requirement that the directive will introduce for the harmonisation of advanced train protection systems. It is well known that, following the tragic Paddington rail crash, Lord Cullen recommended that an advanced train protection system be introduced on all high-speed trains by 2008, with full implementation by 2010. I am sure that the Minister is aware of increasing suggestions by the industry that it might be better to wait a little longer and introduce the level 2 ERTMS, which would provide a proper train management system. That would not only improve safety on high-speed trains but provide better opportunities to maximise the number of trains on any piece of track. Would supporting the directive and its implementation through the regulations prevent in any way the consideration of such a delay?
My second question touches on finance, which the hon. Member for Christchurch mentioned. Last week on the Floor of the House I asked the Minister whether the Government had a clearer understanding of the breakdown between private sector and public sector funding for the improvements planned for the west coast main line, which is covered by the directive. I went on to ask whether, because those improvements would involve some of the requirements under the directives, we could anticipate financial support from the European Union. Are we expecting any of the cost that may arise from the directive's implementation to be paid for by the EU?
My third question relates to concerns that have been expressed by a number of train operating companies that are not directly involved in operating high-speed trains. The freight company, English Welsh and Scottish Railway, and several others have said that, because of the way in which we currently operate our train system in this country, on any one piece of track high-speed trains could be operating alongside those that are not covered by the directive. They are concerned that, owing to the mixing of different types of train on one piece of track, non-high-speed trains may incur additional costs because of the implementation of the regulations. Can the Minister comment on that?
The Liberal Democrats' firm view is that the regulations are sensible and should be supported. The hon. Member for Christchurch says that he can see no benefits arising from them for a very long time, but I wonder whether he has done his homework thoroughly. When I consider the opportunities for opening up competition throughout Europe in, for instance, the purchasing of equipment for this country, I am convinced that significant benefits can be gained from having similarity—as is required under the regulations—for the specifications of vehicles and trackside equipment. I think that he is wrong even in the premise that he posed.
Mr. Chope: The hon. Gentleman must have examined, as I have, paragraph 42 of the regulatory impact assessment, which states:
''at the Member State level no significant direct benefits to the United Kingdom rail network are expected until the new international high speed rolling stock is ordered. In practice
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derogations from the TSIs are likely to mean that the costs incurred by the UK rail network are minimised.''
It says nothing about benefits.
Mr. Foster: I do not know whether the hon. Gentleman is aware that there have been significant changes to the rolling stock for high-speed trains in this country, even during the past few months. Also, I do not agree with the details of the regulatory impact assessment. The independent advice that I have been given, which I am more than happy to share with him, suggests that some benefits could arrive much more quickly than he, or the regulatory impact assessment, anticipates.
Tom Brake (Carshalton and Wallington): I had a meeting with Eurotunnel a few weeks ago during which it suggested that Eurostar might not be covered by the regulations because it is not sufficiently high-speed. Can the Minister confirm that?
Mr. Spellar: I welcome the Opposition's renewed interest in this important issue. The development of measures to improve the interoperability of rail systems will play a role in ensuring that railways offer a competitive, cost-effective, safe and reliable transport system.
It is surprising, as the hon. Member for Bath (Mr. Foster) said, that the Opposition want to revoke the regulations, since their purpose is to implement directive 96/48/EC, which was adopted when they were last in government. The directive introduced measures to improve interoperability to projects for the construction or upgrading of infrastructure or rolling stock on the trans-European high-speed rail network. A later directive—directive 2001/16/EC—will begin to extend the scope of railway interoperability to many conventional lines.
In the explanatory memorandum submitted by the Government in February 1995, my predecessor, Mr. John Watts, said:
''The Government agrees that some degree of interoperability is important to facilitate inter-working on the high-speed rail network''.
''It should . . . lead to greater competition and lower unit costs for interoperable rolling stock, with the UK supply industry having the opportunity to compete in other rail markets both international and domestic''.
Interoperability is a term used in articles of the EC treaty dealing with trans-European networks. The directive is one of a series designed to meet the treaty requirement to
''implement any measures that may prove necessary to ensure the interoperability of networks, in particular in the field of technical standardisation''.
In the context of railways, therefore, interoperability refers to the removal of the mainly technical barriers to the through running of trains on trans-European lines.
The directive will help to progress the single market in the rail sector. The directive has two aims: first, to facilitate market opening by enabling the interworking of high-speed trains across the trans-European
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network, and secondly—and this aim is perhaps more immediately relevant to the United Kingdom—to reduce costs and improve the competitiveness of the European railway manufacturing industry through the adoption of common standards. Hon. Members will be aware that the introduction of common standards has been common in the EC road transport industry for quite a long time—right through to manufacturing.
The directive introduces common standards, conformity assessment and approval regimes for high-speed rail projects across the member states. That will help to reduce the cost of rail transport and will encourage greater competition within Europe, both in the provision of high-speed rail services and in the railway manufacturing industry. The directive should also help to remove barriers to the entry of other operators who want to take advantage of access rights to member states' rail networks. Technical and operational barriers favour incumbent operators and manufacturers.
The harmonisation of technical and operational specifications for the trans-European rail system is vital for the free movement of trains and related equipment in the European internal market. It is, of course, already possible to run train services from one member state to another. Our links with Europe via the channel tunnel are a good example of that. Generally speaking, however, differences between different rail systems militate against movement between member states and have an adverse impact on the competitiveness of international rail transport compared with, for example, road transport. In the United Kingdom, our relatively limited loading gauge will, in practice and for the foreseeable future, restrict the scope for some of those large-scale international operations. However, the greater harmonisation of standards and systems—where appropriate—will still secure real benefits.
In order to establish an internal market for railway services and equipment, where it is practical and cost-effective to do so, we need, on the one hand, to open up access rights to the infrastructure, and on the other to align technical systems progressively to ensure their interoperability. The directives, together with European legislation opening up the rail market, are key factors in that area. They will increase the rail sector's productivity and make it more competitive compared with other modes of transport. The benefits of interoperability cannot be realised if standards continue to be set exclusively at national rather than international level.
Mandatory technical specifications for inter-operability—the TSIs—specify how interoperability is to be achieved. The high-speed TSIs will come into force from this December. Specific national concerns are addressed through the close involvement of national industries in the ongoing development of the TSIs. The United Kingdom industry is actively engaged in this. The increasing use of cost-benefit analysis in those processes and the scope for derogations from the TSIs on a case-by-case basis—most importantly, in situations in which the economic
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viability of a project would be compromised—are important. On top of that, where there are gaps in the TSIs or where derogations are given, existing national standards will continue to apply.
Recognising the complexity of railway interoperability, officials consulted widely while preparing the regulations to implement the directive, to ensure that the risks to industry were minimised. As a consequence, the regulations provide for screening decisions to be made by the Health and Safety Executive as to whether proposed major works in relation to existing infrastructure or rolling stock constitute upgrading for the purpose of the regulations. Similarly, the HSE can make staged works decisions, allowing upgrade projects to be undertaken and brought into service in stages, rather than having to wait until the whole project is completed before giving authorisation to place into service. I am pleased to note that officials continue to work closely with industry to provide advice and guidance—for instance, on the information required at various stages of the process.
I would not want the Committee—not that I think that the hon. Member for Christchurch would be likely to—to think that we see interoperability through rose-tinted spectacles. As I have outlined it, the broad concept looks fine in principle, but we have some way to go before it can become a reality, and it will not be easy to ensure that the eventual product delivers as advertised.
The new regime is very much in its infancy and confined to high-speed routes. It is fair to say that in the UK it has barely been tested in practice, and all involved are still feeling their way. We will continue to examine early operational experience very carefully, to ensure that UK arrangements for high-speed interoperability are updated if necessary. We will also need to ensure that our early experience with the high-speed directive, which is of relatively limited scope, is properly reflected when we implement the more far-reaching conventional interoperability directive.
The high-speed TSIs are incomplete and the standards used where there are gaps in the TSIs still vary between member states. A reasonable level of interoperability will take some years, perhaps decades, to realise. In the meantime, we must work hard, in partnership with industry, to ensure that we do not impose undue burdens on operators or manufacturers. With that in mind, I particularly welcome the recent initiative by the Strategic Rail Authority, which is working closely with industry to establish a sound economic basis for determining the cost-benefit implications for the UK of TSI proposals associated with the conventional directive. It should help inform UK input in the TSI drafting process and ensure that the completed TSIs do not impose excessive costs on the UK.
As highlighted by the hon. Member for Christchurch, cost is a particular concern. Alongside the potential benefits that I described, harmonisation of standards could impose additional costs if we are not careful. Some protection is afforded by the scope for derogations from the TSIs. The TSIs also allow for
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special cases that reflect national circumstances and, where appropriate, member states can propose long-term implementation plans for delivering compliance. That should allow investment in delivering a technically compatible railway to be directed in a considered, practical way.
I must emphasise that the high-speed directive does not require work to be undertaken, but when infrastructure or rolling stock are built or upgraded, they must comply with the directive. That means that, come what may, implementation will be gradual and any additional costs will be spread over a considerable number of years. It also means that the requirements of the directive and the TSIs can be taken into account along with all the other necessary technical requirements—for example, health and safety and disabled access requirements—and designed in as new projects are developed.
The actual cost to the UK of interoperability cannot yet be estimated with any certainty. Much will depend on the specifications of individual projects and whether derogations from the otherwise mandatory TSIs are obtained where necessary. Any additional costs should be broadly offset by the benefits to manufacturers and operators arising from wider markets, which it is right to say at this early stage, are also not quantifiable.
The regulatory impact assessment to accompany the high-speed regulations had to be prepared against that background. It was based on a cost-benefit analysis undertaken on behalf of the European Commission, which estimated an overall cost to the UK of about £92 million over 20 years. However, as I emphasised earlier, that is a hypothetical figure based on unproven assumptions about the impact of technical standards that had not been finalised at that time, rather than on hard factual cost estimates. Although it is based on a reasonably robust analysis on the European level—on the basis of the information at the time—the model did not forecast costs and benefits for individual member states with any great accuracy. It certainly did not take into account the extent to which costs could be mitigated and reduced by derogations from the TSIs.
I fully accept that the uncertainty about the full implications for the UK is unhelpful. I commend the work initiated by the Strategic Rail Authority to address the problems for conventional interoperability. Greater harmonisation of technical specifications complements action to liberalise rights of access to the EU network by making it easier for train operators to operate services across different networks. That enhances the competitive pressure for higher efficiency and delivers better quality of service to customers, which is to the long-term benefit of the modal shift to rail. In the long run, we expect common specifications and standards to reduce unit costs through the potential for larger production runs—very important in this industry—which will similarly help to improve the competitive position of rail against other modes. The UK has supported that goal, provided that interoperability can be achieved safely and cost-effectively.
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When last in government, the Conservative party took a similar position and made a similar point about the high-speed interoperability directive in its explanatory memorandum to the Scrutiny Committee. A further directive on the interoperability of the trans-European conventional rail networks came into force last year, and member states are due to implement it next year. The scope of the conventional directive, and therefore its ultimate impact, is much wider than that of the high-speed one, but in other respects its requirements are similar, although with a number of detailed differences. Much additional work is needed before draft regulations to implement the conventional rail directive can be completed.
The hon. Member for Bath asked several questions. First, he asked about ERTMS 1 and 2. We take on board that point, as do other countries in the EU. To bring in ERTMS 1, with its marginal improvement in safety compared with the train protection warning system, and—more significantly—its considerable impact on rail system capacity, particularly given the substantial increase in the number of passengers and the amount of freight being carried, could have a negative effect on passenger safety, because the reduction in capacity could lead to more people travelling by road, with a higher incidence of accidents. That argument has been well rehearsed in the UK, but it is interesting to note that that discussion is also taking place in Germany. We look forward to ERTMS 2, which will deliver enhanced safety and improved network capacity.